(Yicai) Dec. 4 -- The Chinese market for coffee and tea beverages is already vast, but industry insiders remain bullish on growth, with some even predicting the market could exceed CNY1 trillion (USD141.4 billion) as early as this year.

Investor confidence is rebounding after deal activity slumped following 2022, Zhu Yonghua, a partner at Meituan DragonBall, the venture capital arm of Chinese on-demand services giant Meituan, said at the 2026 Beverages Conference held in Shanghai on Dec. 2.

A slew of initial public offerings this year are feeding back into early-stage investing, Zhu noted, adding that six more companies in the sector are likely to go public over the next five to 10 years, taking the coffee and tea market toward the CNY1 trillion milestone.

The market could be worth CNY1.39 trillion (USD196.6 billion) by 2029, up from a potential CNY1 trillion this year and CNY623.5 billion in 2023, according to Hong Kong-based market research firm iiMedia Research. The market for fresh tea drinks alone may surpass CNY300 billion (USD42.2 billion) this year.

Industry heavyweights such as Nayuki Holdings, Baicha Baidao Industrial, Guming Holdings, Mixue Ice Cream & Tea, Chagee Holdings, and Auntea Jenny have all gone public.

Leading players have already pushed into lower-tier Chinese cities and overseas, signalling a move into a new phase after grabbing market share, Lu Wenbing, founder of Kamen Club, said at the conference, which the media platform organized.

Going forward, tea brands will compete on differentiation, brand premium, and single-store efficiency, while the coffee market will be dominated by scale battles led by top firms, Lu predicted.

Milk tea, with its compound value and supply chain innovations, could become a global symbol of Chinese food culture, said Yan Jianguo, chief executive of Saiseng Dairy, which used to supply dairy products to Luckin Coffee and others.

Many brands have already abandoned the old playbook of rapid store rollouts, price wars, and endless trend-chasing and are focusing instead on squeezing more value out of existing locations and capturing consumer attention within specific time windows.

Because many Chinese consumers treat tea and coffee as daytime pick-me-ups, footfall is heaviest between 10 a.m. and 4 p.m., with far lighter traffic in the early morning and late evening, leading businesses to try out new product offerings for when business is slow.

Mixue has launched a “Breakfast Plan” in cities such as Dalian and Xi’an, offering four products such as a CNY5 (71 US cents) coconut milk, while Chagee also intends to tap into breakfast and evening windows to lift store usage.

In-store experience is also becoming a key differentiator. Hongxing Qianjin Bread & Milk has opened hand-whipped milk outlets in Shanghai to consolidate its cost-effective image by optimizing prices and ingredient transparency. Yee3 has expanded some product lines, including coconut water and rose coconut water, to pursue long-term brand value rather than short-term hits.

Editor: Martin Kadiev